British Airways eyes Chinese airline alliance

By David Flynn , April 8 2016
British Airways eyes Chinese airline alliance

British Airways is hopeful of forging an alliance with either China Eastern or China Southern to strengthen its footprint in the world's second-largest economy.

While stopping short of a joint venture, the move would fill the gap created by the lack of a Chinese airline in the Oneworld family.

Willie Walsh, chief executive of British Airline parent International Airlines Group, said BA has been holding discussions with China Eastern and China Southern – both of which are members of the SkyTeam airline alliance – with an eye towards developing a codeshare relationship.

"We've been for some time in discussions with China Eastern and China Southern with the view to codesharing with British Airways and we're optimistic that we'll make progress there," Walsh told The Wall Street Journal yesterday during a visit to Hong Kong, adding that he hoped to have some codeshare agreements sealed this year.

"We met informally for a number of years but we've been having more formal discussions over the past couple of months," Walsh expanded.

British Airways currently flies between Heathrow and Hong Kong, Beijing, Shanghai and Chengdu.

Qantas last year forged a joint venture with Shanghai-based China Eastern as part of a renewed push into the Chinese market, which includes codesharing on China Eastern's Sydney–Shanghai and Melbourne–Shanghai flights.

The five-year alliance between Qantas and China Eastern can be considered as a Chinese equivalent of the Flying Kangaroo's partnerships with Emirates and American Airlines, helping the Aussie airline tap into the booming Chinese market including business travel to many 'second tier' cities which are hubs for manufacturing.

“Aviation is opening up new travel and business opportunities at a time when the Australia-China relationship is more important than ever to both countries" said Qantas International CEO Gareth Evans at the time of the announcement.

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David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Ooooh Cathay is not going to be pleased.

Poor Cathay...not Chinese enough, yet unable to shake off the yoke of the Chinese.

Qantas - Qantas Frequent Flyer

29 Jul 2013

Total posts 209

I've often wondered why OW airlines haven't formed a joint-venture, spearheaded by CX, to establish an airline in Mainland China.  

Qantas - Qantas Frequent Flyer

07 Feb 2015

Total posts 149

Probably because it's all very political when it comes to aviation in mainland China, having foregin companies (yes CX would be considered a foreign airline) building a start up in China is like asking Jesus to switch religion. Also Air China is a share holder in CX (about 30% I think), and they wouldn't want CX to get into their market.

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 514

That would be because oneworld had CX (and assumed that CX would play a leading role in mainland China) and was too slow to realise that mainland China and SAR's are different animals.

Had oneworld viewed DragonAir differently, it could have had a more efficient partner - but given CX's ownership of Dragonair, Cathay's apparent lack or will to work successfully with many oneworld members .. and the now infamous Air China cross-shareholding in CX - is it any wonder that BA is seeking to replicate QF's establishment of agreements with Chinese carriers outside of oneworld?

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 514

Personally, I think Willie Walsh is looking to get some sublte Chinese visibility for BA here. The MarketWatch article states that BA is not looking to increase the number of Chinese cities (in its own right) but is looking to add 'codeshares'.

To me, this says a number of different things:

1) BA / IAG realise that 3 Chinese carriers in SkyTeam (China Southern, China Eastern, Xiamen) and 1 in Star (Air China) is not all that practical or sustainable. With the addition of Hainan and some smaller regionals, a 'shake-up' and re-alignment of the Chinese carriers' alliance membership is overdue and requires rationalisation. .

2) QF's strategy of creating codesharing ventures with two competing airlines (CZ & MU) in the Chinese market actaully works .. and can be used, provided there is no direct overlap.

3) Both 1 and 2 combined allows BA to view who is doing what / better and thereby get a closer look at which carriers might be a better 'fit' for a BA partnership (and ultimately a potential and acceptable oneworld catch to fill the void).

- it will be interesting to see if the discussions are centred purely on China Eastern and China Southern. Both are international carriers with sizeabe domestic Chinese route networks.

- or will BA look solely towards the newer more nimble regionals such as Hainan, Xiamen, Spring etc. These are primarily domestic carriers but each with developing overseas ambitions. Hainan and Xiamen operate to Australia already.

Qantas - Qantas Frequent Flyer

31 Aug 2015

Total posts 126

The West/East airline codesharing actually works in favour of the Chinese airlines because the outbound traffic from China dwarfs that of the inbound traffic. (An Australian example for this would be the sole QF flight to Beijing vs. many more from Chinese airlines.) With the London airports already being slot congested and no slot allocations in sight, I think an expanded partnership that heavily involves Cathay Dragon (ex-Dragonair) would have been a better choice. I guess we'll see how this one plays out.

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